OPEC Urges Oil Importer to Share the Burden of Price Control

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Sep 4, 2000 - 11:58 AM

OPEC Urges Oil Importer to Share the Burden of Price Control By Doug Mellgren Associated Press Writer

OSLO, Norway (AP) - OPEC's president on Monday urged oil importing countries to share the burden of bringing petroleum prices under control. Ali Rodriguez, also Venezuela's oil minister, said high taxes on fuel, bottlenecks in the refining industry and speculation in oil markets all contribute to price hikes that have stung consumers.

"What are the consuming countries going to do to take on their part of the burden?" Rodriguez said at a news conference in Oslo. "OPEC is doing its part. What are the other countries going to do?"

The Organization of the Petroleum Exporting Countries slashed its own production in late 1998 when a global oil glut pushed crude oil prices down to 12-year lows. Now, prices have more than tripled and OPEC has increased production in a so-far failed bid to bring them down.

Rodriguez was in Norway, the world's second largest oil exporter, to meet Oil Minister Olav Akselsen and Foreign Minister Thorbjoern Jagland. Norway is not a member of OPEC but has often voluntarily joined its efforts to regulate crude supplies.

The nation of 4.5 million people is now producing oil at full capacity, about 3.3 million barrels per day, and says it can do nothing more.

Rogriguez said countries that import oil often earn more on the product than exporters through heavy taxes on fuel and other petroleum products.

For example, he said, in countries belonging to the Organization for Economic Cooperation and Development, taxes represent an average of 60 percent of the price consumers pay for gasoline, while the cost of crude oil accounts for just 12 percent of the total retail price.

"This means that the weight taxes have (on retail prices) is much higher than the price of the raw material has (on prices paid by the consumer)," said Rodriguez, whose remarks were translated into English. He also said bottlenecks in the refining industry can slow supply and increase prices, because importing countries have not invested enough to solve the problem.

Speculation in the market also forces up prices because of bidding for what he called "virtual oil" that doesn't even exist yet.

Despite increased output, oil prices remain at more than $30 per barrel - their highest level since the Gulf War, which ended in 1991. OPEC has agreed to further increase production by 500,000 barrels per day if prices remain above $28 per barrel for 20 straight days. As of Friday, the price has been over that benchmark for 15 consecutive days.

Rodriguez said a November meeting of producing and importing nation in Saudi Arabia would seek ways for both to contribute to stable prices.

http://ap.tbo.com/ap/breaking/MGIBAUOBQCC.html

-- Martin Thompson (mthom1927@aol.com), September 04, 2000

Answers

If Norway is now at full capacity, Indonesia, Mexico, Nigeria, and Venezuela are dropping, they are all kind of talking through their hats. It's all in the hands of Saudi Arabia.

-- JackW (jpayne@webtv.net), September 04, 2000.

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